In This Article:
Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
CJ CheilJedang Corp (XKRX:097950) is focusing on high-growth products like pizza and Manju in the US, which are showing robust sales growth.
-
The company is making efforts to lower costs and maintain operating margins at a high single-digit level despite increased fixed costs and ingredient prices.
-
CJ CheilJedang Corp expects to benefit from the anti-dumping duties on Chinese amino acid imports in Europe, which could improve their market position.
-
The company is planning to shift production in Malaysia to high-margin products to offset losses from weak methionine performance.
-
There is an expected improvement in livestock profitability due to a rebound in hog prices and normalized imports.
Negative Points
-
US profitability is declining due to supply disruptions and increased fixed costs, impacting sales negatively.
-
The BIO segment experienced a decline in major amino acid products due to anti-dumping duties affecting market dynamics.
-
There are significant one-off costs, including KRW255.3 billion in intangible asset losses, impacting financial performance.
-
Market share in Korea has weakened, attributed to less effective promotions and a shift in focus to online sales.
-
CapEx execution was below initial guidance due to a worsening macroeconomic environment, indicating potential constraints on growth investments.
Q & A Highlights
Q: Regarding US profitability, it seems like it's dropping from the past year. Are there any other factors leading to this result, and will the dessert issue continue in the first half of the year? A: The drop in US profitability is partly due to a tornado in November causing temporary pie supply disruptions, expected to impact the first half of the year. We are focusing on other products like pizza and manju, which are showing robust growth. Despite increased fixed costs and ingredient prices, efforts are being made to maintain high single-digit operating margins. (Unidentified Company Representative)
Q: Could you elaborate on the decline in major amino acid products in Q4? A: The decline was due to anti-dumping duties on Chinese imports in Europe, causing a temporary market issue. Prices increased by 30% in Q1. We expect to benefit from this situation, especially in lysine exports to the US and Brazil. (Unidentified Company Representative)
Q: How is the feed business performing amidst intense competition and price issues? A: In Q4, increased imports led to price adjustments for hogs, but profitability has normalized. Hog prices rebounded in January and February, improving livestock profitability compared to Q4. (Unidentified Company Representative)